Karachi September 9 2022: Auditor raised qualified opinion on accounts of Sui Southern Gas Pipeline Company for the period ended December 31 2022 due to disputed receivables of Rs. 72 billion from different entities.
Except for the adjustments, to the unconsolidated condensed interim financial statements due to matters described above, based on our review, nothing has come to our attention that causes us to believe that the accompanying unconsolidated condensed interim financial statements as of and for the half year ended December 31, 2020 is not prepared, in all material respect in accordance with the accounting and reporting standards as applicable in Pakistan for interim financial reporting.
Auditor also draw attention towards reversal of Rs. 26.2 billion and exceeding current liabilities by Rs. 96.5 billion to current assets. However, auditor conclusion is not qualified in respect of this.
The unconsolidated condensed interim financial statements, trade debts include receivables of Rs. 29,645 million (June 30, 2020: Rs. 33,415 million) and Rs. 24,777 million (June 30, 2020: Rs. 24,332 million) from K-Electric Limited (KE) and Pakistan Steel Mills Corporation (Private) Limited (PSML) respectively. Significant portion of such receivables include overdue amounts, which have been considered good by management and classified as current assets in the unconsolidated condensed interim financial statements. Further, KE and PSML have disputed Late Payment Surcharge (LPS) on their respective balances due to which management has decided to recognize LPS on a receipt basis from the aforesaid entities effective from July 01, 2012. Due to the adverse operational and financial conditions of PSML, disputes by KE and PSML with the Company on LPS, and large accumulation of their respective overdue amounts, we were unable to determine the extent to which the total amounts due from KE and PSML were likely to be recovered and the timeframe over which such recovery will be made.
the unconsolidated condensed interim financial statements, interest accrued includes interest receivable of 9,258 million and Rs. 4,563 million from Sui Northern Gas Pipeline Limited (SNGPL) and Water and Power Development Authority (WAPDA) respectively. These have been accounted for in line with Company's practice of charging LPS on overdue amounts, but have not been acknowledged by the counter-party.
Due to dispute with WAPDA, and large accumulation of their respective overdue amounts of interest, we were unable to determine the extent to which the interest accrued amounts due from SNGPL and WAPDA are likely to be recovered and the timeframe over which such recovery will be made.
The unconsolidated condensed interim financial statements which includes amount of Rs. 4,158 million receivables from Habibullah Coastal Private Company Limited (HCPCL) in respect of liquidated damages imposed in arbitration on April 30, 2018 by The lnternational Court of Arbitration. Prior to the decision, the Economic Coordination Committee (ECC) through its meeting held on February 07, 2018 had proposed waiver of liquidated damages and directed Ministry of Energy - Petroleum Division to work out modalities in consultation with all stakeholders. However, to date, no agreement has been finalized between the relevant stakeholders. ln the absence of the agreement, there is no contractual right to receive cash or financial asset from HCPCL and the requirements of /FRS 9 - Financial lnstruments are not met.
The unconsolidated condensed interim financial statements, which indicates that the Company has incurred net Loss after tax of Rs. 1,668 million during the half year ended December 31, 2020 and as of that date, the Company's current liabilities exceed current assets by Rs. 96,534 million. Further matters discussed in the Basis of Qualified Conclusion Section of the report along with other conditions as set forth indicate the material uncertainty exist that may cast significant doubt on the company to continue as a going concern. However, the Company has obtained a support letter from Government of Pakistan (Finance Division) dated July 06, 2020 that commits support to maintain the going concern status of the Company.
The unconsolidated condensed interim financial statements that describes that the Company has reversed the late payment surcharge (LPS) expense of Rs. 26,222 million on delayed payables pertaining to gas supplied by Government Controlled E & P Companies i.e Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited (PPL) and Government Holding (Private) Limited (GHPL) with effect from July 01, 2012 to June 30, 2016 and not recorded LPS expense for the year ended June 30, 2017, June 30, 201 8, June 30, 2019, June 30, 2020 and for the period ended December 31, 2020 amounting to Rs. 2569 million, Rs.7,477 million, Rs. 10,525 million, Rs. 26,335 million and Rs. 14,132 million respectively for reasons described in the said note.
The unconsolidated condensed interim financial statements that describe that the Company is subject to various material litigations and claims involving different courts. The outcome of these cases is uncertain and beyond management's control.